Chrysler Letter on CR Slam

Dear Colleagues,

Yesterday, Consumer Reports announced results from its 2008 Annual Auto Reliability Survey. Subscribers to Consumer Reports are surveyed each year about the vehicles in their households. Predicted reliability for new models is based on the previous three model years for the same model.

This year Chrysler LLC vehicles trailed the industry average and dropped in ranking when compared with last year’s study. The decline in our ratings is based on the results for 2008 model year vehicles that were built about one year ago.

Based on our aggressive focus on warranty claim rate reduction, we know that the cars we are building today have a much higher standard of overall quality. Having said that, due to the three-year window, Consumer Reports ratings are slow to change.

The results tell us a few important things about our approach to quality over the last few years:

* Our overall reliability is below industry average.
* We do have some vehicles that scored above average for reliability.
* We have a corporate-wide commitment to quality that is well on its way and essential to get Chrysler back on the path to sustainability and profitability.

Summary of Results

Predicted reliability is Consumer Reports’ forecast of how well models currently on sale are likely to perform. The Chrysler brand is ranked 32 out of 34 brands and dropped 13 positions compared with the 2007 rankings. Dodge ranked 30 out of 34 and dropped five positions. Jeep ranked 28 out of 34, which is the same as last year.

There were a couple of highlights in the Chrysler results. The Dodge Caliber and Jeep Patriot were ranked above industry average and were considered the best models of the company’s brands.

Clearly, we are not satisfied with our overall results and continue to work aggressively in new ways to improve every aspect of customer satisfaction as we are committed to deliver products that meet consumers’ needs. Since the vehicles in this survey were built, a tremendous amount has been accomplished. We have formed 18 new, cross-functional teams to correct quality problems by vehicle system. Our Customer Satisfaction Teams (CST) are comprised of more than 250 people who have helped reduce quality issues since January. We are continuously measuring our progress and improving the way we work to accelerate our improvement.

In addition to the CSTs, the development processes and testing procedures put into place nearly five years ago have helped with the high-quality launch of the 2009 Dodge Ram. For example, before the 2009 Dodge Ram went on sale, nearly 6.5 million customer-equivalent miles were logged by Dodge truck engineers. The 2009 Ram went through more than 200 hours of wind noise and aerodynamic evaluations, and engineers conducted approximately 40,000 hours of full-scale vehicle and system testing for durability and reliability of the vehicle.

While we expect our company-wide quality initiatives to be successful, we will continue our focus on the needs of our current customers and the priorities of those consumers who are considering future vehicle purchases. Thank you for your hard work and dedication to quality improvement. With all of us having the same focus of “Customer First” and “Quality … Period,” we will continue to accelerate our commitment to quality and strive to meet the needs of our customers.

Sincerely,

Doug Betts
Vice President and Chief Customer Officer

[thanks to you know who you are]